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Shoppers Drug Mart Corp. is using blockchain technology to help doctors and pharmacists ensure the quality of medical cannabis by tracking the movement of the product from seed to store. THE CANADIAN PRESS/Graeme Roy

GRAEME ROY/The Canadian Press

As cryptocurrencies such as bitcoin and ethereum have dropped out of the limelight, the companies making the headlines as the blockchain revolution advances are those using this distributed-ledger technology to streamline their operations.

These companies’ usage of blockchain illustrates how this technology is “creating a second era of the internet,” says Don Tapscott, co-author of the book Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World and executive chairman of the Toronto-based Blockchain Research Institute.

“Cryptocurrencies have been the tail wagging the dog,” he says. “While they have grabbed the headlines, the revolution behind the currencies is spreading rapidly.”

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Blockchain is an opportunity and a challenge for investors. It’s creating exciting new products and services, but the advances are not always easy to understand. Unlocking the value takes time and the companies and products first out of the gate aren’t necessarily the ones that will win the race.

“There aren’t many publicly-listed Canadian companies in this area,“ Mr. Tapscott says. “So, one way to participate is to look at existing companies most affected by the changes. They’re the ones experimenting with the technology and adapting to it – or not.”

Mr. Tapscott, who specializes in the social and economic impact of technology, says there are key differences between the first era of the internet – “internet of information” –and the second era – “the internet of value” – based on blockchain. The first is a medium that copies information, with the original, or multiples of it, stored elsewhere – such as an e-mail or photo.

But when it comes to things such as money, our identities, or intellectual property, copying is a bad idea.

Blockchain reduces the need for a middleman, cutting costs, speeding up transactions and improving privacy. Blockchain does this because transactions are shared among partners in a contract or business deal, so each has the same information. Everyone can see the transactions when entered and once entered nobody can change them. That makes them tamper-proof.

Government, insurance, financial services, health care and food safety are areas in which the implementation of blockchain is being considered or taking place. Here are a few examples:

· Canada and the Netherlands announced earlier this summer that they’re working on a pilot project with the World Economic Forum and consulting firm Accenture PLC to replace your passport with your smartphone. They’re testing blockchain technology to store the information securely.

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· Air Canada is involved in a blockchain-based platform for travel agents and others to book airline tickets, while Air France-KLM has tested blockchain as a way to store and make aircraft maintenance records available transparently.

· International Business Machines Corp. (IBM) and shipping company Maersk have teamed up to develop a blockchain-based system that tracks ships and their cargoes to reduce insurance costs and also help customs officials know when cargo arrives more accurately.

· Shoppers Drug Mart Corp. is using blockchain technology to help doctors and pharmacists ensure the quality of medical cannabis by tracking the movement of the product from seed to store.

· An outbreak of E. coli bacteria on lettuce supplied to Walmart Inc. led the company to use blockchain to track fresh produce at its stores. Suppliers of leafy greens must now be able to follow the produce from when it picked to when it was delivered. This is another IBM initiative, through the IBM Food Trust.

· Reliance Industries in India announced in August that it’s moving 300 million customers on its Jio mobile network to blockchain, delivering financial services to citizens through the technology.

Individual blockchain stocks listed in the United States and elsewhere – as well as exchange-traded funds – offer opportunities, Mr. Tapscott says. But a more conservative approach is to tag along with today’s technology leaders.

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That means following companies such as IBM (IBM-N), Microsoft Corp. (MSFT-Q), MasterCard Inc. (MA-N) and Paypal Holdings Inc (PYPL-Q). Other early adopters are logistics companies, including FedEx Corp. (FDX-N) and United Parcel Service Inc. (UPS-N).

These companies are most affected by the changes blockchain brings and are motivated to maintain their dominance. So, they explore and incorporate the potential.

But a decade from now, Mr. Tapscott expects to see major disruption caused by digital currencies and their use of blockchain technology. This disruption is beginning to take shape. Facebook Inc. (FB-Q), along with dozens of partners, is planning to launch the digital currency Libra next year.

If government hurdles to implementation, globally, can be overcome, Libra would take advantage of Facebook’s 2.4 billion active users to offer a way to buy things outside the banking system. Libra’s founding members are a “Who’s Who” of financial services and new economy firms. They include MasterCard, PayPal, Visa Inc. (V-N), eBay Inc. (EBAY-Q), Vodafone Group PLC (VODPF: OTC US), Spotify Technology S.A. (SPOT-N), Lyft Inc. (LYFT-Q) and Uber Technologies Inc. (UBER-N). A white paper on Libra’s website lays the details of the project all out, including the development of a new blockchain.

Mr. Tapscott says Libra is the one of many threats to the global banking system. Another, reports suggest, is China’s plan to launch a digital version of the yuan. Mr. Tapscott says the U.S. government has to formulate a response to these developments.

“The U.S. dollar isn’t going anywhere soon, but I suspect within a decade, the U.S. and many other countries will have created their own digital currencies. They will have to respond to China and corporate projects like Libra. There will be no choice,” he says.

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The problem for some companies is what’s known as the innovator’s dilemma, Mr. Tapscott says. They have to make a choice between continuing to serve existing customer needs with a tried and true business formula or make radical change to position for the future. Some can’t do it.

“When the first internet kicked in, companies like Kodak, Barnes and Noble, Blockbuster or Nortel all looked like good investments,” he says.

Adam Mayers is a contributing editor to the Internet Wealth Builder investment newsletter.

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